Common Market good for Kenyan farmers

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DAVID NALO

Many analysts have in the recent times focused on interrogating whether Common Market is good or bad to farmers (or producers) in general.

These analyses contain some facts, but in certain instances they miss the point, primarily because of lack of appreciation of the implementation steps of the Common Market Protocol on the one hand, as well as lack of knowledge of how Common Markets work in general even in the most advanced integration regimes like the European Union.

The Common Market Protocol which came into force on 1st July 2010 opened borders of the Partner States. The acknowledgement that cheap products from neighboring countries can move freely is a manifestation that the EAC Common Market is working. The EAC Common Market will bear a lot more benefits in the long term to the producers, consumers, as well as traders in the five Partner States.

The days are gone when maize movement within the country let alone the region was restricted. One could find pockets of shortages in the midst of plenty in some parts of the country and the region.  The elimination of restriction of maize movement had the effect of equalizing prices across the country, with prices only been differentiated by transport costs.

This is what has happened with the coming into force of the EAC Common Market Protocol  The Common Market has extended the boundaries of Kenya to entry and exit points of the community, a region now comprising of more than 126 million people and characterized with free movement of people, goods and services.

This large population gives both the producers and consumers alike a wide range of commodities which hitherto were not available at the right prices. Kenya is now able to grow maize seed and sell to this large market which may not have been available due to previous restrictions in their various forms.

As the East African Community progressively integrates under the CMP, the current scenario where particular regions of the country experience momento food surplus due to improved weather and also as a result of influx of cereals from outside the country as experienced in Trans Nzoia /West Kenya Region will definitely change.  Such eventualities make the farmers to temporarily face difficulties in disposing off their produce at better prices. 

The coping mechanisms to this temporal marketing price slump could be through strengthening of farmer institutions, provision of market information, development of associated market infrastructure and adoption of modern marketing techniques like signing contract agreements with millers for price futures. This latter type of arrangement is able to guarantee farmers prices even before they plant and therefore allowing them to plan ahead.

The lower prices of the cereals from Uganda are precipitated by application of different technologies and production systems which translates to different production costs.  Our Ministry of Agriculture needs to make necessary adjustments in the production systems geared towards reducing production costs.

The practicalities of the common market will demand tradeoffs to be incorporated into the marketing systems. Moreover supporting production at high costs for whatever reasons may in the long run prove to be uneconomical and unsustainable.

Indeed it goes against our aspirations of becoming globally competitive economy by the year 2030 as espoused in our Vision 2030. The influx of cheaper cereals on the other hand is seen as a blessing to the consumers and it will act as a catalyst to induce formulation policies to cushion the farmers and adopt efficient technologies that are economical. 

The changing trading regimes will render certain preset objectives to become obsolete or inappropriate as economies grow and change. Low food prices become less important if consumer incomes increase; high producer prices may be irrelevant if farm incomes and production technologies change significantly. Improvement in transportation infrastructure, for example, could change the potential for agro industrial development and for the introduction of new cropping opportunities and can improve the efficacy of producer price support schemes.

The dynamism in the marketing landscape in the common market for East Africa will offer alternative coping mechanisms to the farmers such as diversifying from consumer grain production to contractual seed maize production for seed companies which are struggling to meet the regional seed demand. Other alternatives may include strengthening farmer capacity to   value add their produce through storage and processing.

In addition the farmers could increase their bargaining power and market share if they do group marketing where marketing information dissemination is enhanced.

The Common Market Protocol provides under article 13 the rights of establishment and residence. Citizens of Partner states will have the right to migrate to other regions with comparative advantage where they could carry out economic activities including farming. 
These are indeed now opportunities that our people need to think about and explore.

In Kenya, addressing the high cost of production and promotion of local production by our Kenyan farmers will require the relevant ministries and institutions involved in the production process, marketing and purchasing of cereals in the country to make the necessary interventions and address the issues of high inputs costs and current glut of maize within Trans Nzoia region. 

We must address issues such as why do we import subsidized fertilizer but by the time it reaches a farmer in Rift Valley, Western or Nyanza the cost if five- fold.  These are not necessary Common Market issues but internal efficiencies that must be addressed.

One way to do this is to have the Ministry of Special Programmes and/or the National Cereals and Produce Board (NCPB), build National Strategic   Grain Reserves by buying the locally produced maize. The inflow of Uganda maize will act as a stabilizer to consumer prices and therefore we need not punish the consumer while building the strategic grain reserves.

Similarly local chapters of International relief organizations like WFP and United Nations Relief Agencies should be encouraged to purchase locally  once the farmer\’s institution have developed capacities to supply the amounts in required quantities. This will call for strengthening of farmer institutions.

In a nutshell, common market is not to blame for the inflow of cheap products to the country rather there is a range of many important factors. It is a wakeup call that we must start to do things differently!

(Mr Nalo is the Permanent Secretary in the Ministry of EAC).

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